(a) Purpose. This part establishes minimum capital requirements and overall capital adequacy standards for System institutions. This part includes methodologies for calculating minimum capital requirements, public disclosure requirements related to the capital requirements, and transition provisions for the application of this part.
Terms Used In 12 CFR 628.1
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Exposure: means an amount at risk. See 12 CFR 628.2
- Farm Credit Act: means the Farm Credit Act of 1971, as amended (12 U. See 12 CFR 628.2
- System institution: means a System bank, an association of the Farm Credit System, Farm Credit Leasing Services Corporation, and their successors, and any other institution chartered by the FCA that the FCA determines should be considered a System institution for the purposes of this part. See 12 CFR 628.2
(b) Limitation of authority. Nothing in this part limits the authority of FCA to take action under other provisions of law, including action to address unsafe or unsound practices or conditions, deficient capital levels, or violations of law or regulation under part C of title V of the Farm Credit Act.
(c) Applicability. Subject to the requirements in paragraph (d) of this section:
(1) Minimum capital requirements and overall capital adequacy standards. Each System institution must calculate its minimum capital requirements and meet the overall capital adequacy standards in subpart B of this part.
(2) Regulatory capital. Each System institution must calculate its regulatory capital in accordance with subpart C of this part.
(3) Risk-weighted assets. (i) Each System institution must use the methodologies in subpart D of this part to calculate total risk-weighted assets.
(4) Disclosures. (i) All System banks must make the public disclosures described in subpart D of this part.
(d) Reservation of authority–(1) Additional capital in the aggregate. FCA may require a System institution to hold an amount of regulatory capital greater than otherwise required under this part if FCA determines that the System institution’s capital requirements under this part are not commensurate with the System institution’s credit, market, operational, or other risks according to part 615, subparts L and M, of this chapter.
(2) Regulatory capital elements. (i) If FCA determines that a particular common equity tier 1 (CET1), additional tier 1 (AT1), or tier 2 capital element has characteristics or terms that diminish its permanence or its ability to absorb losses, or otherwise present safety and soundness concerns, FCA may require the System institution to exclude all or a portion of such element from CET1 capital, AT1 capital, or tier 2 capital, as appropriate.
(ii) Notwithstanding the criteria for regulatory capital instruments set forth in subpart C of this part, FCA may find that a capital element may be included in a System institution’s CET1 capital, AT1 capital, or tier 2 capital on a permanent or temporary basis consistent with the loss absorption capacity of the element and in accordance with §628.20(e).
(3) Risk-weighted asset amounts. If FCA determines that the risk-weighted asset amount calculated under this part by the System institution for one or more exposures is not commensurate with the risks associated with those exposures, FCA may require the System institution to assign a different risk-weighted asset amount to the exposure(s) or to deduct the amount of the exposure(s) from its regulatory capital.
(4) Total leverage. If FCA determines that the leverage exposure amount, or the amount reflected in the System institution’s reported average total consolidated assets, for a balance sheet exposure calculated by a System institution under §628.10 is inappropriate for the exposure(s) or the circumstances of the System institution, FCA may require the System institution to adjust this exposure amount in the numerator and the denominator for purposes of the leverage ratio calculations.
(6) Other reservation of authority. With respect to any deduction or limitation required under this part, FCA may require a different deduction or limitation, provided that such alternative deduction or limitation is commensurate with the System institution’s risk and consistent with safety and soundness.
(e) Notice and response procedures. In making a determination under this section, FCA will apply notice and response procedures in the same manner as the notice and response procedures in §615.5352 of this chapter.